After Egypt’s star turn at Cop27 in November, Oman seized the low-carbon hydrogen spotlight this month, staging its second annual summit centred on the sultanate’s similar ambitions to become a global leader in hydrogen.

The government revealed during the summit that around 40 companies had expressed interest in the auction launched in November for two 320km² concessions near Duqm to be used for hydrogen production, with awards due in March next year. And Oman is seeing strong interest from international steel, energy and shipping heavyweights, which have provisionally agreed to invest in the country’s hydrogen potential.

Steel

The most eye-catching of the deals signed during the summit—for its size, concreteness and novelty—saw Jindal Shadeed, a subsidiary of New Zealand’s Vulcan Steel following the exit of its long-time Indian owner last year, ink a memorandum of understanding (MoU) with the government agency responsible for the Special Economic Zone at Duqm to set up a green steel plant at the site on the east-central coast, the emerging hub of Oman’s fledgling green hydrogen sector.

Oman is seeing strong interest from international steel, energy and shipping heavyweights

Muscat has signed up a steady stream of international investors to schemes both there and at Salalah in the far south but the focus thus far has been on producing hydrogen and its derivatives for export, trading on the sultanate’s advantageous geographical location. But Muscat shifting its attention to abatement of domestic industry emissions both adds security to investment at a time when international hydrogen trade is still developing and enables Oman to equip key industries to compete in a decarbonising market.

While Jindal Shadeed’s Duqm MoU calls for the development of a 5mn t/yr ‘green hydrogen-ready’ steel plant, scheduled for completion in 2026, it has left plans for the associated hydrogen facility undisclosed. The steel firm had previously signed an agreement in April with Germany’s Hydrogen Rise to develop a solar-based green hydrogen plant to decarbonise production at its 2.4mn t/yr integrated steel plant at the northern industrial city of Sohar, with capacity envisaged starting at 35MW in 2024 before rising incrementally to 350MW.

Seoul-based rival Posco went a step further in affirming Oman’s potential by pledging to consider establishing its first-ever plant in the sultanate, using output from an associated green hydrogen production facility to produce low-carbon iron feedstock. At a bilateral forum convened in parallel with the main summit, the company revealed plans to bid in consortium with other South Korean firms for one of the two concessions in the Duqm area up for grabs in the ongoing licensing round.

Posco’s plans ultimately to produce 7mn t/yr of green hydrogen worldwide are primarily geared towards exporting the fuel back home to decarbonise domestic plants but executive vice-president Juik Cho told attendees that establishing a green hot-briquetted iron facility in Oman was under study with “one of the most competitive iron ore companies in the world”. The government has made clear that projects with an offtaker on board will be favoured in the auction—and those tied into local industrial expansion are likely to be especially alluring.

Fertiliser

The summit also heard the first intimations of abatement plans for the sultanate’s fertiliser industry. Government energy sector holding company OQ signed a MoU with Oman India Fertiliser Company, its joint venture with two Indian firms, to consider producing blue ammonia at their 3.5mn t/yr ammonia and urea complex at the port city of Sur. A scarcity of gas, as well as the sultanate’s competitive advantages in producing green hydrogen, means blue hydrogen plays only a minor role in Muscat’s sectoral strategy.

2040 – Maersk target for net zero

However, the sultanate is nonetheless assessing options for the anticipated increases in gas production derived from major upstream discoveries last decade. And adding carbon capture and storage to turn existing ammonia production from grey to blue is a prudent means of insulating the business against greenward shifts in customer preferences.

The blue ammonia plans elaborated by Shell at the summit illustrate the phenomenon. The Anglo-Dutch major, the main international player in Oman’s oil sector since its birth in the 1960s, confirmed that it was studying the feasibility of using gas under development at the Mabrouk field in the northwest to produce blue hydrogen and potentially ammonia at Duqm, Sur or Sohar. A sign of changing times, Shell had originally planned to deploy the output in notoriously carbon-intensive gas-to-liquids production before scrapping the plans two years ago and pledging to study cleaner alternatives.

Shipping

Use of low-carbon hydrogen to decarbonise the sultanate’s bunkering services is another area judged ripe for early take-off, as global momentum grows behind reducing the shipping industry’s vast emissions.

Oman’s favourable maritime location—on major shipping routes to Asia while outside the Strait of Hormuz chokepoint—is one of its key selling points more broadly as a potential production centre for hydrogen and its derivatives. Its aspirations to serve as a green bunkering hub received a significant boost at the summit when Danish shipping giant Maersk signed a memorandum of co-operation with local logistics company Asyad, Japan’s Sumitomo Corporation and OQ to conduct a joint feasibility study on producing e-ammonia and/or e-methanol at Duqm and/or Salalah, primarily for use in bunkering operations at Omani ports and potentially for export.

Maersk aims to decarbonise its entire business by 2040. “To succeed there is a critical need to link these efforts—that means enabling green bunkering opportunities in strategic shipping locations,” regional managing director Christopher Cook explained with respect to the potential Omani investment.

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Author: Clare Dunkley